The State of Bitcoin Ordinals in 2024

In the last year, Bitcoin network activity has surged due to the introduction of Ordinals and Ordinals-inspired technology.

Ordinals differ from traditional NFTs by letting users inscribe data like images, videos, and text on the Bitcoin blockchain. This development sparked excitement and controversy within the Bitcoin community, marking a unique chapter in Bitcoin's history.

But the Ordinals story is far from over. The Ordinals protocol has already established itself as a revolutionary development that has changed everything from how Bitcoin wallets approach digital asset transactions to the role non-fungible tokens (NFTs) play in furthering decentralized technologies. 

History of Bitcoin Ordinals

The groundwork for Ordinals was laid by the "Ordinal Theory" concept developed by Casey Rodarmor, which incorporated Bitcoin's SegWit and Taproot upgrades. Ordinal Theory assigns a number to each satoshi based on its mining order. This numbering system became the foundation for attaching data to specific satoshis (sats).

Ordinals officially launched on the Bitcoin mainnet on January 20, 2023. The "genesis ordinal," a pixel art skull inscribed by Rodarmor himself, marked the beginning of a rapid rise in popularity.

By February 2023, the project gained momentum when Yuga Labs, the creators of the popular Bored Ape Yacht Club collection, announced its first Bitcoin NFT collection using Ordinal inscriptions. This mainstream recognition and the novelty of NFTs on the Bitcoin blockchain led to a surge in Bitcoin transactions and Ordinal inscriptions.

As of March 2024, over 64 million inscriptions have been recorded, marking a 100x increase from approximately 600,000 in mid-2023, according to data from Dune Analytics.

Bitcoin Ordinals Collections: Highlights

The popularity of Bitcoin Ordinals means that new collections are always emerging that redefine digital ownership and creativity. Some of the top Ordinal collections on Bitcoin include:

Taproot Wizards

Taproot Wizards, launched in May of 2023, is a collection of 2,121 wizard characters, of which 2,108 have been minted so far. The project originated from a 2013 Bitcoin meme, "magic internet money," featuring a wizard, which became a symbol within the crypto community. The collection is also an ode to Bitcoin's Taproot upgrade, which played a key part in enabling smart contract interactions on the network.

On February 1, 2023, Taproot Wizards and Bitcoin mining company Luxor made history by mining the largest ever Bitcoin block, which contained a Taproot Wizard. The block, which was 3.96MB in size, reignited numerous discussions regarding the fundamental principles of the Bitcoin network. It also immediately established the Taproot Wizards team as one of the biggest innovators in the Bitcoin ecosystem.

To this day, the Taproot Wizards team is still pushing the envelope on what is possible on Bitcoin. Their latest project, Quantum Cats, serves as yet another example of their commitment to building additional use cases on the world's oldest blockchain.

Quantum Cats

Quantum Cats features a series of 3,333 digitally-rendered cats using Ordinal’s recursive principle introduced in July 2023. As we mentioned, it was launched by the same team behind Taproot Wizards and revived discussions around an op code known as OP_CAT.

The collection employed an "evolving Inscriptions" technique. While the specifics are not fully public, it essentially means the cat images can potentially change over time. For the same reason, the cost of inscriptions is also very high because the size is of each of these Ordinals can be over 10MB (2.5 times the block space in a single Bitcoin block).

TwelveFold

TwelveFold is a limited series of 300 generative art pieces each representing a unique geometric pattern based on twelvefold symmetry. Yuga Labs unveiled TwelveFold in February 2023, and it has maintained its position as one of the top-tier Ordinal collections in the market.

Yuga Labs maintained interest for TwelveFold by launching a TwelveFold puzzle series that offered users prizes for solving a monthly puzzle. While the puzzle series ended in December 2023, the team has continued to drum up enthusiasm for their collection. Recently, Yuga Labs gave TwelveFold owners the opportunity to obtain signed physical prints of their pieces.

NodeMonkes

NodeMonkes is a collection of 10,000 pixelated monkey characters inscribed in February 2023. It was one of the first large-scale profile picture projects on Ordinals.

Their early inscription date and recent million-dollar sale have garnered significant attention within the wider crypto space. The collection has also gained popularity through strategic marketing, like issuing 400 honorary inscriptions to notable figures in the web3 ecosystem.

OnChainMonkey (OCM)

OnChainMonkey consists of 10,000 uniquely designed monkey avatars, each with its own traits and accessories. Initially, OCM was an NFT collection on the Ethereum blockchain. In September 2023, the project migrated to Bitcoin for the network's decentralization, security, and the untapped potential of the Ordinals market.

OCM, through its OCM Dimensions collections, was among the first to showcase the impact of recursive inscriptions. Through these inscriptions, OCM could inscribe high-end 3D art that otherwise would be impossible as the file size would easily exceed the 4MB block space limit.

The Ordinals Evolution: What’s new & what’s next

Recursive Inscriptions to Get Around Block Space Limitations

Each block in the Bitcoin network has a limited data capacity of 4MB. Since inscriptions occupy more blockspace than regular transactions, they can quickly bloat the network. This often translates to higher operational costs for Bitcoin node operators, which then results in higher fees for users.

Recursive inscriptions, introduced in September 2023, tackle this issue by referencing data similar to IPFS. With recursive inscriptions, new inscriptions can reference and borrow the already available data and introduce only a small amount of new data into the network.

As a result, more data can be stored on the blockchain, without bloat.

Reducing blockchain bloat this way opens up the possibility of inscribing Ordinals with heavy media files. It also could enable complex projects like Bitcoin-based gaming. Developers can deploy games on Bitcoin and use the technology supported by recursive inscriptions for most in-game on-chain assets. Game studios could then update games by adding to previous updates instead of re-uploading all information to the blockchain every time.

Interactive storytelling, like Netflix’s Black Mirror, is another possibility. Here, each chapter can be a new inscription linked to the previous ones, offering a unique way to experience narratives.

Cursed Inscriptions and the Jubilee Update

Early iterations of Ordinals were susceptible to "cursed inscriptions". Cursed inscriptions are essentially Bitcoin NFTs with certain anomalies or inaccuracies in operation codes (a.k.a. opcodes). As a result they could not be indexed or recognized by the protocol.

To address this issue, the Ordinals software was updated wherein each of these cursed inscriptions were assigned negative numbers, starting from ‘-1’. Additionally, at a certain predetermined block height (block 824544), all newly inscribed cursed inscriptions would be officially recognized as Ordinals in an update nicknamed “The Jubilee.”

Since the Ordinal space is still growing, more anomalies like cursed inscriptions are expected to occur in 2024. However, like we saw in the case of cursed inscriptions, the community is usually pretty proactive in patching up issues such as these.

Parent-Child Inscriptions for Provenance Tracking

Parent-child inscriptions are a specific type of recursive inscription used for establishing provenance and creating collections on the Bitcoin blockchain.

Imagine a family tree where the "parent" inscription acts as the root and "child" inscriptions branch out from it. A child inscription inherits data and proves its origin from the parent. This allows you to track the ownership history of an inscription, similar to a certificate of authenticity.

By creating a parent inscription as the "collection root," you can link all subsequent inscriptions as "children" belonging to that collection. OCM Dimensions is a great example of this.

Moving into 2024, parent-child inscriptions could fuel applications that require easy provenance tracking. Think sectors like politics, intellectual property (IP), and property ownership.

Parent-child inscriptions could introduce a new layer of efficiency and trust in supply chain tracking, mirroring the impact of blockchain technology in other sectors. By providing a reliable and unforgeable record of each item's journey, from production to delivery, these inscriptions promise to revolutionize how we view and manage digital and physical assets alike.

Asset Gating

Another concept that has been in development is the use of Ordinals for "inscription gating" on platforms like Discord. This entails giving users exclusive access to digital communities by verifying ownership of an inscription.

Several platforms on Ethereum provide NFT-gated services. For example, Huddle01 allows token-gated group video calls. We can expect similar developments in the Bitcoin ecosystem, where people could unlock experiences based on the sats they hold in their Leather wallets.

BRC-20 Tokens: Fungible Tokens Come to Bitcoin

The excitement surrounding Bitcoin Ordinals also spurred the development of BRC-20 tokens. To date, almost 52 million BRC-20 tokens have been minted since they launched on the Bitcoin blockchain, accounting for almost 4,800 BTC in fees. 

BRC-20 tokens leverage the Ordinals protocol by inscribing JSON data onto satoshis. However, Ordinals are non-fungible, meaning that each inscription is unique and BRC-20 tokens are fungible, which means that each token within a set is interchangeable.

It has been historically difficult for Bitcoin to support smart contracts or token creation compared to newer blockchains like Ethereum. But by using Ordinals technology as a means to store both the metadata and transaction logic of a token, BRC-20 tokens can bring additional functionality to Bitcoin.

For instance, Liquidium, a decentralized P2P lending protocol built directly on the Bitcoin blockchain, is one of the early innovators in this space. It allows individuals to borrow and lend Bitcoin without relying on centralized exchanges or custodians. Liquidium's uniqueness lies in its use of Bitcoin Ordinals (unique digital assets on the Bitcoin blockchain) as collateral.

Thus, BRC-20 unlocks a wide variety of use cases on the Bitcoin blockchain and we could see more iterations on the token standard in 2024.

What’s Next for Bitcoin Ordinals?

The future of Bitcoin Ordinals looks promising, with continued development and use cases tying to the core protocol. As the space moves forward, we expect more marketplaces and wallets to support Ordinals. 

Leather is at the forefront of new Bitcoin Ordinal innovations. You can seamlessly explore the entire Ordinal community (and the entire Bitcoin ecosystem) with Leather to keep up with the latest on inscriptions. 

Connect to web3 applications built on Bitcoin with the Leather browser extension. Install Leather – the only wallet you need to tap into the multilayered Bitcoin economy – today.